If you’re still using traditional accounting software – or even a paper-based system - in your business, switching to cloud-based accounting may seem daunting.
But you might be surprised at the benefits it can bring to your business. Among other things, it can dramatically improve collaboration and security, help you control the level of access to your financial information and provide an overview of your business’ financial position in real-time. Plus, you can finally ditch the Excel spreadsheets (or shoebox!).
With cloud-based accounting, your financial data is stored in the cloud (rather than on to a server), which means those with a login can access it securely from anywhere with internet access. Businesses pay a monthly subscription, whereas those using traditional software pay a significant fee upfront.
Stacey Price, of Healthy Business Finances, says many small businesses are still getting their heads around the technology.
One of the major benefits of cloud-based accounting is the ability to choose the level of access: for example you could give your payroll person access only to payroll - not your sales figures.
“Businesses don’t want to give out the exact details of how the business is performing,” says Ms Price.
“If you change bookkeepers or change accountants, or an employee’s leaving, you can take away their access.”
Let’s take a look at three of the most popular offerings.
Ms Price says Xero is the best known, and probably the first true cloud-only accounting software.
“The feedback is that Xero is easy on the eye. People just feel familiar.”
Ms Price says Xero has been designed for small business owners, not just bookkeepers or accountants.
“The biggest plus is that business owners can use it straight away, whereas with MYOB you need a little bit of training.”
There are a few downsides to Xero: no phone hotline (though you can email, or ask your accountant), and you can also only use Xero if you have internet access.
Ms Price says some users also don’t like the fact that you can’t back up Xero, though she suggests that businesses download their reports each quarter.
If you’ve used the traditional version of MYOB, the cloud-based version will look familiar and should be easy to use, says Ms Price. However it can be daunting for first-timers.
Ms Price says MYOB has a Melbourne-based phone support team.
“The support from MYOB is amazing, QuickBooks Online is second and Xero would be third,” she says.
Another bonus is that if you have unreliable internet access, you can download a desktop version and keep working. Once you have internet again, the file will update online.
MYOB has a handy ABN look-up feature. It is also better for more complex inventory needs, such as managing retail stock, she says.
The cheapest of the three, Ms Price says this service is “designed for the lower end of the market”.
As with Xero, the only way to back up QuickBooks is to download the reports you need and save them on to your computer, says Ms Price.
Even the cut-price versions allow free payroll for up to 10 employees.
Where to start
Start by asking yourself a few questions, including the following:
Now that you know what kind of help you might need in your business, how can you make sure you find the right people from day one?
It will be difficult to find great help if you don’t have any clarity on what you want to achieve by working with that person, says Robert Gerrish, business coach and founder of website Flying Solo.
For example, if you’re trying to hire a great marketing person, first nut out a clear aim. Do you want the phone to ring, do you need some exposure, or do you want to increase sign-ups for your product or service, for instance?
Mr Gerrish says ideally you’ll be able to condense your aim down to a single sentence, such as ‘I want to generate new business leads’.
“Start to look around for people who are positioning themselves as doing that precise work,” he says.
On the subject of marketing, Mr Gerrish says you should be taking note of how any marketer is presenting themselves to the world.
If you’re searching for someone to help with IT support, but don’t really know what you need, Mr Gerrish suggests enlisting the help of a more tech-savvy friend or colleague who can help you prepare a one-page brief on what you need done.
Word-of-mouth remains one of the most surefire ways to find quality people to help your business, says Gerrish.
It also pays to ask your potential freelancer or professional for contact details of past clients that you can speak to, or examples of work they’ve completed which is similar to your needs.
Gerrish suggests asking past clients how responsive the person you want to hire is, whether their rates are reasonable, and whether they ever received any surprising invoices.
You should also be asking your potential help about their measures for success, such as ‘how will I know when you’re doing a good job for me?’ says Gerrish.
If you’re hiring a professional such as an accountant, check they belong to an industry body such as CPA Australia or the Institute of Chartered Accountants.
CPA Australia’s general manager of public practice, Peter Docherty, says if you’re looking to get an accountant on board, you should be asking what their areas of specialisation are, and which industries they service.
“What type of client relationship do they prefer? How accessible will they be? Will you be talking to an accountant directly or to a staff member?”
If you’re running a small business, chances are your success doesn’t just depend on you and your immediate staff.
Almost all successful enterprises have a network of people they can turn to for professional help - accountants, marketers, web designers and lawyers to name a few. And while you may not always have a huge budget, it’s still crucial that you find quality people who are not only easy to work with, but will put in the hard yards to help your business prosper and grow.
Whatever level people are in their business, they need to start with the end in mind,” says Fabrice Beillard, of Australia Business Coaching.
“If you start to manage it in that way it will start to be obvious you cannot do it all yourself.” So how do you know what’s worth outsourcing?
Whatever stage you’re at, it’s likely you can at least delegate some of your business’ regular, long-term tasks.
Smaller companies – those under the six-figure mark – might benefit from a virtual assistant or someone to help with the different aspects of digital marketing.
Those in growth mode are probably most in need of outside help to help take their business to the next level. “If they don’t do that they’re going to be stuck running in circles all the time,” says Mr Beillard. He says it’s also become much more common for larger companies to outsource tasks such as accounting, or basic administration.
Divide up the regular tasks that your business performs – for example under the areas of marketing, sales, compliance or accounting – and note who currently performs each task.
“You still want to know your numbers, but you don’t need to be the one that’s going to punch every receipt into the system,” he says.
Many businesses make the mistake of either wasting their own time, or choosing outside help based on the cheapest price, says Mr Beillard.
“People end up spending a lot of time doing trial and error, spending a lot of resources but not getting the right outcome.
“They’re generally looking at things mostly in terms of how much it’s going to cost them, but they end up having to get it redone.”
If there’s one thing any small business is always short of, it’s time.
Often we get so bogged down in the day-to-day things that keep our businesses ticking along, it’s impossible to free up the time needed to dream up big-picture plans.
The great news is there’s an increasing number of productivity tools that can help you easily (and cheaply) streamline your operations – hopefully boosting your profits in the process.
Here are five tools you can start experimenting with now.
This project management tool allows teams to divvy up work, thrash out ideas, store and organise files and assets, and layout deadlines.
Matthew Magain, who runs the whiteboard animation business Sketch Videos, says Basecamp helps him assign to-do lists, and chat with his copywriter, illustrator and videographer in one online location. He also uses it as a repository for shared documents.
“This stuff normally happens over email or phone calls – the fact that they get sent a notification (when tasks are updated) is a huge time saver,” he says.
Alternative option: Freedcamp
Dropbox keeps files such as photos and documents safe and synced, making them easy to share.
Mr Magain uses Dropbox to store and share videos and other files that are too big to email.
It also allows him to store the various elements of each video in separate folders, such as scripts, imagery and audio, which everyone in his team can automatically access.
In his second business, the online learning resource UX Mastery, Mr Magain uses HipChat, a tool that enables teams to chat privately or in a group and share files.
Users are able to organise conversations, dubbed ‘rooms’, by topic.
For instance, Mr Magain uses ‘content’ to chat around podcasts and newsletters, and the ‘community’ room for chats about fostering the business’ online community.
Alternative option: Glip
Task management tool Things is something Mr Magain says he “would not be able to live without”.
The tool is basically a giant to-do list, which can be viewed by project, topic, or priority.
Mr Magain uses it to capture anything he needs to do in his professional or personal life, and the information is synced to his phone.
He uses it in conjunction with an Excel spreadsheet, where set times for each task are laid out.
“I realised that if I don’t plan my time like this then I’m completely reactive.”
Alternative option: Todoist
Advertising agency PENSO uses a large array of productivity tools to improve business efficiencies, including software development tool Jira.
Penso’s head of production David Rigbye says Jira has helped the business dramatically improve the way it delivers its products - such as websites, designs and videos - to clients.
“It allows us to break projects into tasks and ship them incrementally,” says Mr Rigbye.
“Rather than disappearing for months on end and launching a big project at the end of that period - it enables us to deliver the first component in one week or even one day.”
Alternative option: Assembla
Rewarding employees for a great performance is one of the best ways to ensure the business is able to attract and retain the right staff. While financial incentives are of course important, they are not the only way to show staff you appreciate their work.
So here are five great ideas to motivate your team without breaking the bank.
Stacey Price from Healthy Business Finances says this is the first step when it comes to rewarding great employees.
“I also pay for them to do training and I know my business has benefited from my employees’ extra skills. Staff also love the challenge of undertaking training they would otherwise not have done,” she says.
Great communication techniques are a critical business management tool – especially when a quick fix can address an employee’s concern. For instance, one of Price’s employees told her they didn't like the timer function in the program the business uses to track time for client jobs.
“So I bought a $4 miniature electronic timer which I gave to her and she was over the moon. Listen to what your staff need to make their job easier,” says Price.
Don't expect because one person loves wine all staff are happy to receive a nice bottle for a job well done.
“Some people might want to finish 30 minutes earlier on a Friday to get home to see their family. This costs the same as a bottle of wine and I know my employees love getting an early mark once a month,” she adds.
Giving employees Christmas puddings every year is boring and predictable. Plus, if staff don't want the incentive you are trying to give them then it really is not an incentive. Price suggests researching alternatives and giving staff personalised gifts. “Last year at Christmas I gave staff themed wine charms. People loved them and they cost less than $10 each.”
Above all, never forget to say thank you to your staff. It’s easy to forget to praise staff when they do a good job and we’re often very quick to criticise if things don't go to plan. Instead, make sure you acknowledge staff every time they turn in a top performance.
Blood, Sweat and Tears
You are no longer the start-up business owner with a dream and passion. After 3 or more years of hard work, persistence and some anxious nights - your business is established and you may even be drawing wages.
Remember when you approached the bank for financing at the start and the answer was: ‘too early for us’ or the Bank Manager asked you to provide your home as security or possibly suggested you fund your business with an expensive business credit card?
It is just so perplexing when today an enthusiastic Business Development Manager of the same bank has become aware of your business success and wishes to proactively market their services to you.
He says “If you could provide me with a business plan telling me your story; how your business works; and bring a 12 month cash flow forecast and copies of the last 3 years historical financial statements….we could have a really good conversation.”
And you are thinking that you funded the business from savings and family loans, toiled into the wee hours and weekends, sacrificed family holidays to build the business. It has been substantially de risked. And your bank is now stating they would consider a square shaped loan if you have some square shaped box full of the required information. Well, whilst you could do with a cash injection to kick-start a new campaign, you just do not have the time to compile the information required and quite frankly you have more pressing priorities; like generating income today.
Here are two real life examples that establish the needs of small business when it comes to growth: convenience, speed and access to finance.
Grace runs an established gift and home wares retailer with sales approaching $1m per annum. Lately, her revenues have been growing due to the ever expanding suburban population and increased foot traffic in the main street shopping strip. And online sales have steadily grown over the last 3 years without any advertising. Grace and 3 full time staff are very busy, and her mother works two days a week part time to help as well. After she closes the shop and completes some daily administrative tasks, she gets home well after 6pm to take care of her two children. She gets some breathing space after 9pm when the kids are in bed. Grace knows that hiring a book keeper 1 day a month will help – a small marketing budget could increase online sales – and the shop next door is available for lease which would give her more space to meet customer demand especially as Christmas approaches.
All of this will require a $65,000 investment, and she will need to finance it. The Bank across the road closes at 4.30pm, and she finds it difficult leaving the shop during the day to visit a banker. One night she goes online to search for options and finds the website of a marketplace lender called Banjo. The online application takes less than 10 minutes and it is easy to complete due to drivers license identification and the download of financial records from her cloud based accounting software (MYOB). She is asked a time when the lender can call, and a time is arranged for 8.30am as she is driving to open the shop. After some general discussion about the business, the loan is approved and the funds are deposited into the nominated business cheque account the next day. No documents required, no paperwork: all completed online with a brief telephone conversation. Grace’s priority was funding the expansion to make the most of the Christmas retail season and she was able to achieve this with fast funding. Banjo served her needs at rates equivalent to a traditional financier and the Bank didn’t even get a look in.
Eddie runs a commercial property firm with a large customer base for both small businesses and mid-sized corporates for a region of Victoria. The firm is well known and valued for their ‘straight up’ approach. Lately he has been so busy that he has 4-5 day pre-set schedules with no room for ad hoc meetings.
Despite a strong and regular rent roll, commercial real estate sales can fluctuate, and Eddie knows he has a looming cash flow shortage with GST and Superannuation payments due at the end of the quarter. He knows these will easily be covered in March with some excellent property sale listings.
Eddie approaches a local bank but the analyst viewed the funding of statutory payments as a sign of a distressed business. Eddie was not willing to pledge his family home as collateral, and decided not to proceed with the loan application. Five pages of application forms and a 3-week waiting period were just not worth his time.
On a Sunday watching his son play football from the comfort of his car, he went online searching for small business loans and found Banjo. The application was completed in 10 minutes, he downloaded his Xero accounting information and he received an approval Monday morning. The funds were deposited to the business cheque account that day.
The Bank believed Eddy was a less credit worthy customer. Banjo reviewed all available data in real time to obtain a holistic view of the business and made a different decision.
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There are many such case studies: busy business owners that are passionate about their trade and customers; there are many service businesses owned by young people that may not have purchased a home; there are opportunity hunters that know you must act quickly to capitalise on a growth option.
Banjo uses a myriad of available financial data to obtain a holistic view of the business in real time. We provide a unique user-friendly online customer experience: not a bricks and mortar destination separated from reality by a moat of rigid rules.
Sounds just brilliant to me.
* These case studies are taken from real Banjo customer experiences
